Edition 03/2002

Transferring Sports Liability

As sporting administrators throughout Australia are continually frustrated by issues concerning the availability and affordability of liability insurance, it is natural that attention be directed to means by which sporting organisations can seek to transfer responsibility from themselves and their insurers to those participating in sport and recreation activities.

Whilst risk management is an effective method of reducing an organisation's potential liability, its benefits are often not seen for many years down the track.  As such, sport and recreation organisations will often seek to transfer the risks involved in participation to the user by requiring members and participants to sign waiver and indemnity agreements.  But just how effective are such agreements in protecting an organisation?

What is a release?

A release is the relinquishment of rights against another party.  A release may also be referred to as a waiver (whereby the participant waives their rights to sue should an injury be incurred).  To be effective a release must be in writing and must be supported by consideration or in the form of a deed.

What is an indemnity?

An indemnity is a contractual document or clause in a contract whereby one party promises to pay another for any losses that may arise from the acts or omissions of a third party.

Is the clause reasonable?

When drafting a release or indemnity it is necessary to keep in mind that it has to be reasonable.  It should be no wider or broader than required to legitimately protect your contractual interests.  If a dispute arose over an indemnity or release its reasonableness will be considered.

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In determining what is reasonable, the wording of the document needs to be considered.  A clause providing an indemnity or release for all and every liability which may arise now or in the future may be considered to be too broad and hence unenforceable.  Focus must be had on the actual rights which require legitimate protection.

What is the effectiveness of the conditions?

Such documents and clauses have been reviewed considerably over time by the courts.  Some liabilities can not be excluded.  For example, the Trade Practices Act 1974 (Cth) prohibits the exclusion of some terms which it includes in all consumer contracts for consumer protection.  The courts' treatment of such documents and clauses vary widely, resulting from the combined effect of the quality of the document and the circumstances of the matter.  A "quality" document reduces the number and type of disagreements that could be experienced.

How should a release and indemnity be drafted?

1. A release should stand on one page, that is, all relevant considerations must be visible above the signature.  All other information such as registration details, medical considerations, terms and conditions for participation and safety matters should be provided separate from the release.

2. Releases should be on standard size paper, care must be taken in folding, as a fold is vulnerable to complaint that the signer did not see all the above.  Typeface size should not be such that the clause can only be read with the aid of a magnifying glass.

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